Asia Bond Risk Drops to One-Week Low, Credit-Default Swaps Show

Dec. 10 (Bloomberg) -- The cost of insuring corporate and
sovereign bonds in Asia from non-payment fell to the lowest in a
week, according to traders of credit-default swaps.

The Markit iTraxx Asia index of 40 investment-grade
borrowers outside Japan decreased 0.5 of a basis point to 113
basis points as of 8:23 a.m. in Hong Kong, Credit Agricole SA
prices show. The gauge is set for its lowest close since Dec. 3,
according to data provider CMA.

The Markit iTraxx Japan index declined 0.5 of a basis point
to 170 as of 9:23 a.m. in Tokyo, Citigroup Inc. prices show. The
index is on track for its lowest close since Dec. 5, according
to CMA, which is owned by McGraw-Hill Cos. and compiles prices
quoted by dealers in the privately negotiated market.

The Markit iTraxx Australia index was little changed at
126.5 basis points as of 11:23 a.m. in Sydney, according to
Credit Agricole. The index fell 3.6 basis points last week, CMA
prices show.

Credit-default swap indexes are benchmarks for insuring
bonds against default and traders use them to speculate on
credit quality. A drop signals improving perceptions of
creditworthiness, while an increase suggests the opposite.

The swap contracts pay the buyer face value in exchange for
the underlying securities if a borrower fails to meet its debt
agreements. A basis point is 0.01 percentage point.